Paul Ryan, in accepting his nomination as vice-presidential candidate at the Republican National Convention, promised the admiring crowd that he’d do battle with “central planners.” (http://www.toledoblade.com/Politics/2012/08/30/Ryan-vows-leadership-rips-Obama.html) One might wonder just where these central planners came from. During the 20th century the world saw some efforts at central planning of national economies—notably in the USSR, Communist China, and their allies and satellites. Now, we know what happened to them—the USSR went belly up, Communist China embraced capitalism, and the few old-guard communist states still left in the world, like North Korea, are poster children for failed policies. The “central planning” bogeyman is simply not under the bed any more.
By “central planning” Ryan ostensibly meant the Obama Administration. Now, if anyone thinks that this administration (love it or hate it), which would be considered center-right if it was in power anywhere in Europe, is involved in “central planning” of the U.S. economy, then that individual merely shows a tenuous a grip on reality that is not a very suitable qualification for high public office.
The best way to understand what Ryan might have meant in invoking dread of “central planners” is that he was trying to channel one of the heroes of the Republican right and of economism more generally, the Austrian economist Friedrich Hayek (1899-1992). Let’s take a look at Hayek and what he meant when he attacked central economic planning in his often-cited 1944 work, The Road to Serfdom.
Fox News commentator Glenn Beck gave The Road to Serfdom a new boost in sales in 2010 by saying: “This book was like a Mike Tyson (in his prime) right hook to socialism in Western Europe and in the United States. But its influence didn’t stop there. It has inspired political and economic leaders for decades since—most famously Ronald Reagan. Reagan often praised Hayek when he talked about people waking up to the dangers of big government.” (www.glennbeck.com/content/articles/article/198/41653/)
There are a number of features of The Road to Serfdom that deserve attention, and in later posts I’ll discuss more of them. Here, I’ll discuss the historical times during which Hayek wrote and how they shaped his thinking.
Hayek had two big things on his mind as he watched World War II unfold from his vantage point as a former resident of Austria then living in Britain, teaching at the London School of Economics (from which he would later relocate to the U.S.). First, he was disgusted by colleagues who took seriously the propaganda attacks that the Fascists and communists launched at each other, making it appear that they were as far apart on the political spectrum as could be. Hayek saw both systems as totalitarian and believed that there was little real difference. He ironically dedicated The Road to Serfdom to “socialists of all parties,” making his point that he saw no real difference between right-wing socialists of the Nazi persuasion and the left-wing socialists who took inspiration from Stalinist Russia. He argued that the Nazis, instead of being a reaction against Germany’s experiments in socialism after World War I, were a natural culmination of those policies (a view that at least some historians would quibble with).
The bigger game he had in his sights, however, was central government planning of the national economy. From where he sat at the London School of Economics, it seemed to him that it did not matter whether policy thinkers tacked toward the left or the right wing politically. In either case they advocated a planned economy. They took for granted that the Great Depression of the 1930s was the result of unplanned capitalism, and that the only solution was some sort of central economic planning. Hayek wrote The Road to Serfdom principally to refute them.
Hayek argued that central economic planning, which he equated with socialism, ultimately was destructive of human freedom and led inexorably to systems like Naziism and Stalinism. He was a reasonable and gracious opponent (explaining some of the charm of the book that no doubt contributed to its popularity). He did not accuse the moderate socialists of his day of wanting these outcomes. He accepted their protestations that they were strong proponents of liberty and were horrified by the excesses of Hitler and Stalin. He thought them naïve, however, to imagine that socialism could be restrained in a way that preserved freedom. He was sure that even dipping one’s toe in socialist waters was the same thing as diving in headfirst, and that socialism led to totalitarianism no matter what one’s fond hopes of preserving individual freedom.
If Hayek’s central message is opposition to central economic planning, today he would get hardly any objections from anyone. I cannot see any way to characterize the history of the world during the 20th century except to say that it proved the wrongness of centrally planned economies as a policy tool. The fall of the USSR and the retreat by Communist China from a state-run economy made clear the defeat of this notion. Since no one today (besides bizarre outliers like North Korea and Cuba) advocates central state economic planning, then if Hayek were writing now, his book would have hardly anything left to say.
So one conclusion we need to keep in mind about Hayek is that he had a specific agenda that grew out of the specific time in history during which he wrote. He might have had valid warnings for 1944 readers that are simply irrelevant for us today.
What happened in the world since 1944 has also answered another question that was on Hayek’s mind. Hayek, as we saw, was certain that it was an all-or-nothing proposition—either you avoided any tiny hint of socialism, or else you slid all the way down the famous slippery slope into the totalitarian abyss. Let’s take as our examples Great Britain and Scandinavia. Both, in the decades following World War II, embraced some elements of socialism. Britain avoided a full socialist agenda and stopped with what is technically known as the “welfare state.” The Scandinavian nations went farther and adopted frankly socialist policies.
Again, you can like it or hate it. You can say this was a good idea for these nations, or a really stupid idea. You can say that the U.S. should emulate them, or that the U.S. should be warned off by their errors. But can anyone say, with a straight face, that these countries, during those years, became totalitarian, just like Nazi Germany and Stalinist Russia? You’d have to be a raving lunatic to seriously try to make such a case. So Hayek’s other claim, of the slippery slope to totalitarianism, seems to have been pretty thoroughly debunked since 1944—to anyone, that is, who has not drunk the Kool-Aid of economism.
This, in turn, tells us something about the supposedly “new ideas” put forth by the Republican Party and its bright stars like Paul Ryan. This particular new idea dates back to 1944—and has not exactly aged well in the years since.
Part 2 of this 4-part commentary is at:
Part 2 of this 4-part commentary is at: